Dunedin Income Growth Investment Trust posts strong first half results

Dunedin Income Growth Investment Trust posts strong first half results

Dunedin Income Growth Investment Trust, a fund managed by abrdn, has posted strong half year results for the six months ended 31 July 2022.

Against a difficult backdrop, the company, has delivered an almost flat absolute return for the six-month period. In addition, the portfolio continues to exhibit strong quality characteristics, while retaining a premium yield to and superior dividend growth to the market.

The trust’s Net Asset Value (NAV) stood at -0.1^ for the period, in line with the company;s benchmark the FTSE All-Share Index, return of -0.1%.
Revenue account performance during the period was strong. Revenue earnings per share rose by 16.2% during the period to a new interim record level of 8.54p per share (2021: 7.35p).

This increase was driven by a combination of a rebound in dividend payments from companies recovering from the effects of the pandemic, as well as strong underlying trading from a number of holdings.



A first interim dividend in respect of the year ending 31 January 2023, of 3.0p per share (2021: 3.0p), was paid on 26 August 2022 and the Board has declared a second interim dividend of 3.0p (2021: 3.0p) per share, which will be paid on 25 November 2022 to shareholders on the register on 4 November 2022.

Revenue earnings per share rose by 16.2% during the period to a new interim record level of 8.54p per share, compared to 7.35p in 2021.

Ben Ritchie and Rebecca Maclean, investment managers, Dunedin Income Growth Investment Trust, said: “Despite the sharp gyrations in markets caused by the conflict in Ukraine and concerns over inflationary pressures, the Company’s net asset value total return performance was in line with the benchmark index over the period, recording a fall of 0.1% in total return terms.

“The first quarter of the financial year was particularly challenging, following on from a difficult last few months of 2021/22. The increase in bond yields combined with surging commodity prices made for a tough period for relative returns.

“The second quarter, however, saw more favourable conditions emerge and we were also aided by continued good operating performance from a number of the holdings in the portfolio as well as a takeover offer for Euromoney Institutional Investor, the events and database business.”

They added: “Pleasingly, income delivery was ahead of our expectations over the period. This was driven by a continued recovery in more cyclical dividends post-pandemic from the likes of retailer Pets at Home and construction companies Marshalls and Morgan Sindall where, despite share price weakness, their cash generation and robust balance sheets allowed for substantial increases.

“It was also pleasing to see AstraZeneca return to dividend growth for the first time in a decade. We continued to generate income from option writing, where relatively elevated levels of volatility have facilitated higher prices.”

They concluded: “We continue to be very active in our engagement approach with holdings in the portfolio. During the period, this included, amongst many others, seeking to improve governance at Abcam and Prosus, discuss water and supply chain security at Diageo, decarbonisation strategy at SSE and human capital management at Prudential and Ubisoft.

“Being aware of these potential risks to the companies’ long-term strategies and looking to drive mitigation and create opportunities is a key part of our investment approach.”

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